Advisory firms in the UAE are witnessing a huge drop in business following the spread of covid-19 and the subsequent lockdown, which is forcing them to redraw their business strategies to stay afloat in an uncertain market.
“The pandemic, and the following developments, is a game changer,” said DJ Sengupta, managing partner of Capstone Insurance in Dubai.
“Most markets have not coped well with the situation that changed overnight. Many advisory firms and their advisers have seen a huge drop in business because they still rely on age-old face-to-face meetings. There was no opportunity to meet face-to-face during the lockdown.”
Krishnan Ramachandran, chief executive of Barjeel Geojit Financial Services, said: “The financial advisory market is quite muted at this point in time given the uncertainty and volatility that is prevailing in the financial markets.
“The sharp corrections across almost all asset classes have led to erosion of most investment portfolios.”
Dramatic change
With restrictions on the movement of sales and marketing executives of advisory firms, there has been a shift in strategy, particularly with regard to online and social media marketing, effectively going from face-to-face to screen-to-screen.
“The process of rendering advice to investors will undergo dramatic changes. Technology is going to be a great enabler in this respect and investors will henceforth be able to access or receive more customised and specific inputs tailored to their risk profile,” Ramachandran said.
“It is very important to be in touch with the customer at this juncture. If your business model was robust enough during the pre-pandemic phase, it is only a matter of time before you start to engage more productively and actively with clients and consolidate their portfolios.
“However, if there were lapses earlier with respect to the investment advice and choice, then it’s going to be very difficult to get back the client engagement or attention,” he added.
Power of social media
But Sengupta believes that some of the fundamentals will not change.
“Advisers will still need to build trust but that trust will get built or destroyed over digital channels.
“Any organisation that cannot effectively leverage the power of social media will struggle to survive.
“Covid-19 will force organisations to make these changes. Some organisations that focused on this long before covid-19 came along and have taken steps to ensure that they build their brand over digital and social media.”
Sengupta advises that, in order to survive and thrive, all advisers and advisory firms will have to learn this new way of doing business.
Changing forever?
The moot point is whether the recent developments will change the financial advice market forever.
Sengupta says it’s absolutely important.
“In the past few weeks we have seen banks and insurance companies digitising their sales processes like never before. It seemed that every large organisation threw all their resources behind redesigning their sales processes in a way that face-to-face meetings are not necessary anymore.
“This change was forced upon us, but in all likelihood these changes will be permanent in nature.”
Ramachandran says that the slowdown and volatility on account of the pandemic will certainly redefine the future of the financial advisory business.
“For instance, risk assessments of investment propositions are likely to be more stringent and this will call for more sophistication, understanding and marketing by the financial advisers.”
Opportunities in adversities
Like in any other business, there are opportunities in adversity.
“Volatile markets are actually the best time to re-establish trust with customers and reiterate the benefits for which they have been investing regularly in the past. These are the times when we as advisors need to ensure that our customers do not panic and give them the confidence to stay the course,” Sengupta says.
Tides ebb and flow
Tough times call for tough measures.
Sengupta says: “Don’t try to make changes in a hurry. Absorb the winds of change and come up with a model that works best for your company.
“In the short run everyone will face difficulties. However, the changes we make now will ensure that we survive and thrive. Get ready to run a marathon.
“For several years we have experienced a rising tide. Rising tides take every boat higher, but ebbing tides ground the big ships first. Look at every cost that you have, drive efficiencies higher and build your brand. Do things you never had time to do, focus on re-engineering processes and upgrading technology.
“Reach out to your existing customer base. They are the ones who hopefully trust you the most and will be the ones easiest to sell to;
“Be transparent with your employees. Offer a calm, rational, empathetic face to your employees. You need them more today than ever before.”
Advisers in general are not perturbed by the market developments though investors are circumspect in view of the new wave of recession and a continuing bearishness across all markets.
In response to the question of how the advice market can stay afloat, Ramachandran said: “We need to understand that we are not in a ‘doomsday’ phase.
“It’s only a matter of time that we will see economic activity and recovery happening, which will throw up a new segment of investible opportunities and choice to investor in the near term.”
